I agree – no summer surge – I expect a summer bummer… User psychology will show that as economic, interest rates, weakened dollar, etc. data gets worse, more buyers will not risk buying at the current hugely inflated prices.
I think you misread my post about buying – I am absolutely not going to buy for at least 2 years, and maybe beyond that. I will buy when I feel that the possible downside (which I think is huge right now) is somewhat aligned with possible upside. There is NO way that prices will start appreciating in the next 2 years. Even believing that they will be flat is crazy. There is way, way, way too many problems in the RE market, not the least of which is the time lag in selling properties. If this was the stock market, we could see a crash in 1 day. With RE it is ALWAYS lagging. We only see prices on the houses which do sell, not the vast majority which either cannot sell, will take a huge time and huge reductions to sell, or have been withdrawn from the market – but will come back on the market in 1, 2, or 4 years based on eveyone realizing that there is a bubble, was a bubble, and prices are retreating.
I think that folks will be kicking themselves for not getting out now at any somewhat reasonable price (2003-2004 prices). It’s only getting worse and it will continue.
It’s amazing how cycles, bubbles, and the psychology of the herd always ALWAYS pan out. When the tech stocks crashed some smart folks sold out at 60-80% of the highs… Others refused to take the profit and rode it all the way down to 1-5% of the high. (Example Corning Glass Works $100 stock went down to 2$)… If you bought at $20 and sold at $50 you still would have a 30$ profit.. If you didn’t you were greedy. I wasn’t a smart person (but not completely stupid!!!) – I bought at $100 and sold at $18!!! But if I had been on 50% margin I would have lost everything when it hit $50. This is similar to the housing bubble. Here in LJ prices went up 257%…. If you bought a house at 300K and can’t sell it at 1.4M, sell it at 1.2M!!!! In a year you won’t be able to sell it at 1.1M and you will finally sell at 900K.
This is also paralleled in the equity situation. Homes are usually hugely leveraged… A 1M$ home which has 30%-40% equity will have 0 equity if prices come down 30%… If prices are heading downwards – unless you are going to ride out the cycle (which will be 3-8 years – I’m betting on 6 years heading downward with 10-12 years to get back to 2004), you are going to be upside down.
Anyway – no one has a crystal ball, but as most people own homes and most want to own homes, there are blinders on and the market psychology will be the telling factor…
